Suppose You Purchase 100 Shares of GM Stock at the Beginning

question 52

Multiple Choice

Suppose you purchase 100 shares of GM stock at the beginning of year 1 and purchase another 100 shares at the end of year 1. You sell all 200 shares at the end of year 2. Assume that the price of GM stock is $50 at the beginning of year 1, $55 at the end of year 1, and $65 at the end of year 2. Assume no dividends were paid on GM stock. Your dollar-weighted return on the stock will be __________ your time-weighted return on the stock.

• A) higher than
• B) the same as
• C) less than
• D) exactly proportional to
• E) More information is necessary to answer this question.

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